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Zero-party data, a major opportunity for brands in 2021

May 04, 2021
5 min

The last 12 months have profoundly and irreversibly transformed consumer shopping habits. More than ever, companies need to better understand their customers by putting data at the centre of their strategy to deliver an experience that is relevant, personal and engenders brand loyalty.

The broader global economic and health context; increased competition; and the upcoming end of third-party cookies are driving marketers to refocus their resources on their own customer data. Between "first-party data" or "zero-party data", what data should brands focus on to deliver a premium experience that respects customer privacy? How do they transform this data into actionable insight that adds business value? Russell Loarridge, Director, UK, ReachFive, explores.

Regulations, the end of third party cookies: a revolution in the data world

Businesses are under increasing pressure from customers who demand a relevant and personalised online experience that matches what they have been offered in-store. Personalisation is not something that can be improvised; rather it must be based on in-depth and timely customer knowledge. Until recently, "third-party” data (that which has been aggregated from multiple sources) has been the primary source of customer knowledge and was considered something of a marketing magic bullet. Today, however, technological barriers - such as the disappearance of third-party cookies - and regulatory changes (IDFA (Identifier for Advertisers) on iOS, AAID (Android advertising ID) on Android, GDPR in Europe or CCPA (California Consumer Privacy Act) in the United States) are putting consumers back in control of their data. As such, a strategy based mainly on third-party data is a strategy that is destined to fail.

Harnessing the potential of first-party data

First-party data – that which companies collect directly from their audiences, customers and prospects via purchase histories, interactions on their sites or applications, or loyalty programs - is an interesting alternative. 52% of marketers aim to collect more first-party data in 2021 as part of their digital strategies.

However, if "first-party data" is essential to drive a better understanding of an individual user and allow marketers to make more informed decisions in order to optimise their marketing strategies, it is not the panacea.

Any marketing strategy based mainly on this historic customer behaviour data, is, in fact, going to be subjective, based on probability and inference and therefore not enough to satisfy the demands of today’s discerning consumer. We should not make the same mistakes in 2021 that we have made over the past decade and exploit data without truly understanding who our customers are and what their real-time and future needs are. This is where zero-party data comes in, data that is voluntarily and intentionally shared by customers to improve their online experience.

Stop guessing with data, 2021 is the year of zero-party data

Until now, brands have built their digital marketing strategies on probabilistic data, and not on the much more reliable and objective deterministic data. While the concept of zero-party data may seem confusing at first glance, it offers the capability to transform how brands market to their consumers.

Guessing what customers want is no longer necessary: just ask them. A zero-party data strategy is not implemented by forcing users to fill in their data, but by creating a relationship of trust. In providing a ‘give to get’ value proposition, consumers are more likely to share their information, sometimes even in larger quantities, in exchange for a more qualified customer experience and customised content that will bring them value. Handled correctly, this data can be the next holy grail and companies need to start preparing for it now to master its workings.

How do you implement an effective "zero-party data" strategy?

To successfully implement a zero-party data strategy, brands need to collect the data, information and permissions they need to create personalised marketing at all stages of the customer lifecycle.

  • The first step is to manage customer preferences in real-time. To do so, brands must ask customers relevant questions or solicit them through different methods such as quizzes, surveys, interactive experiences, etc... as soon as an individual creates a customer account. But beware, asking for too much information at once may have an adverse effect, so the trick is to ask for this data gradually, throughout the customer journey. The goal is to establish a relationship of trust with a customer - only asking what is necessary to offer the best possible shopping experience.

  • Customers need to be able to manage how they want a brand to communicate with them and update this at any time. Brands, therefore, need to provide consumers with the ability to easily manage their consents from the outset of an engagement. Today, to be satisfied, a customer needs to feel unique.

  • Finally, once all this information is gathered, it is important to be able to share it, in a completely secure manner, with all the brand’s customer relationship and omnichannel solutions. In order to be effectively managed and value gleaned from it, this data must be structured and unified in a single database rather than scattered across various data silos.

In the majority of cases, marketers rely on overburdened IT resources to manage these huge amounts of data; but to absorb, sort, analyse, and make it quickly actionable, marketers need robust technologies, now more than ever. These solutions will enable them to handle the increasingly complex task of managing and integrating identities across all internal solutions.

The personalisation of the customer experience will become even more important in the coming months. In order to design effective marketing strategies, companies - most of which have started to actively use first-party data in their marketing - will also have to rely on zero-party data. In order to provide a deeply personalised experience and generate the most value, merging these data sets appears to be the most appropriate way forward.

Only companies that have already implemented solutions, such as ReachFive's CIAM, will be able to offer their customers the unique experience they expect.

It enables a brand to identify their users and personalise their experience through a customer journey based on their preferences and a relevant – and regulatory compliant - use of their data.

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